[ExI] Bottom-up currencies

[Emlyn]

On 10 March 2011 18:25, Aleksei Riikonen <aleksei at iki.fi> wrote:
> On Thu, Mar 10, 2011 at 9:02 AM, Emlyn <emlynoregan at gmail.com> wrote:
>> It strikes me that there are many circumstances (eg: geographic or
>> cultural communities) where the ability to form a special purpose
>> currency would be really useful. Maybe when culturally cohesive groups
>> are too big for gift economies, and scarce resources are in play, and
>> there is some reason that government money isn't a good choice? The
>> disincentive though is that it can be difficult to interact with other
>> currencies (eg: regular money!).
>>
>> So, a couple of things:
>>
>> 1 - Where is the theory on this stuff; where should I begin to look? I
>> am guessing there's some useful libertarian writing on this, for
>> example.
>>
>> 2 - If it is useful, it seems that it's something that needs a
>> technological platform to make it really go. If you can set up a
>> currency somewhere trusted, which will enforce your local rules, track
>> who has how much of what, and provide the ability to for people to
>> make trades between currencies, with copious APIs for third parties to
>> work with it, then you have the basis for a decentralisation of
>> currency that could be really interesting.
>>
>> Other thoughts?
>
> Here's the solution you are looking for, it has been up and operating
> for a while now:
>
> https://en.bitcoin.it/wiki/Main_Page
>
> --
> Aleksei Riikonen - http://www.iki.fi/aleksei

It's a solution, but not the one I'm looking for.

What's on my mind is that Money is, fundamentally, imaginary.
Something it seems to do, which we understand viscerally, is provide
us with "conservation of value"; similar to intuitions such as
conservation of volume. If I give you something, you should give me
back something of equal value. "Fairness" is mixed up in there
somewhere.

Except, that it doesn't look like that if you make the money. In that
case, it's now something else, a confidence game. What is money worth?
Whatever we think other people think other people think it is worth.
So if I can convince enough other people that their confederates think
their other confederates will attribute value to it, then
it will have value, and I can go ahead, mint it, and hand it out.

Which governments do (and is one reason why the intuition about
national government budgets being like a household budget are dead
wrong).

So I'm thinking that really, any group should have the power to make
its own currency and work with it if they want to. They decide how
much of it there is, when to issue more, and what the rules are.
There's a lot of power in that, great links in the wikipedia local
currency article talk about it.

And I guess we see it all the time. Online games and social networks
create new currencies all the time. There are lots of historical
examples. But, it never seems to take off as a mainstream concept. And
meanwhile, I think we often have opportunities for creative and
productive endeavour stifled simply due to there not being enough
currency around to make them go, largely because the community that
understands the opportunity doesn't have the cash, and the people with
the cash don't understand the opportunity.

The ability for any group to just define and implement a new currency
at the drop of a hat (and then another and another) seems to me like
something that wants a platform. Particularly, if you could easily
interoperate between currencies (because there was a smooth technical
platform which provided for allowed automated administration and
trading), the concept would be more appealing, because if you build up
real value in a mini currency, you could realise that value in trades
outside of the currency's community. And communities get to take
advantage of the benefits (and bear the risks) of making their own
currencies; micro-economies stop looking like a zero sum game in that
context I think.

Relating this back to bitcoin, that's trying to do something
different. It appears to be trying to be a single currency (not
designed to make many separate currencies), and the ideas about the
money supply seem to be about trying to tie it to something external
and objective and non-manipulable with respect to the participants,
which goes in a different direction to what I'm thinking about (ie:
actually giving that power of creation and manipulation of the
collective delusion of money to the participants themselves). It also
looks like it's trying to be digital cash, which is a laudable aim,
taking away the power of the central institutions; I would propose to
do that rather by groups simply abandoning currencies where the
central institutions are letting them down.

-- 
Emlyn

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